Sellers should take temperature of area market

April 08, 2006

SMART MOVES ELLEN JAMES MARTIN Home sellers have been in an enviable position for several years, often able to choose from more than one bid. Nowadays, though, the playing field is a lot more level. The number of properties that can command top dollar from buyers is dwindling but certainly hasn't disappeared, says Mike Summey, the co- author of books on real estate investing published by McGraw-Hill. "There are still some hot localities and hot properties in every market, but a lot of these are unique, high-end homes. Maybe they offer a spectacular view, close proximity to great amenities, or a lakefront where you can dock your boat," he says. But most sellers -- even those with homes a block away from that lakefront -- can't just assume there's a buyer out there willing to pay what they think is fair. "When pricing your home, you need to look at the facts for your area without emotion. Face reality and then price accordingly," Summey says. Here are several pointers for those planning to market their homes in the near future: -Watch for warning signs of a cooling market. Summey says one sure sign that the temperature is falling in a neighborhood is that the number of available properties has surged. It's easy to obtain statistics from your listing agent on what Summey calls "average turn times," also known to real estate agents as "days on market." If you notice that the average interval between the listing and sale of homes in your community is lengthening, you can assume the market is losing some momentum. Statistics showing bulging inventories also hint at the same trend. -Don't follow the lead of stubborn neighbors. Dorcas Helfant, former president of the National Association of Realtors, says many sellers cling to unrealistic price expectations even in the face of clear evidence that their markets are chillier than before. As she notes, buyers trying to keep up with shifts in real estate valuations have a big ally these days in the Internet. Most can quickly spot a home that's overpriced and are unlikely to bid on it. Ironically, your neighbors' overpriced property could help you sell your place -- assuming your home is in equally good condition and is priced realistically. Buyers will see both homes on the same tour, and the sharp contrast will make your place stand out favorably, Helfant says. -Avoid delaying your sale unless you can afford to wait. Suppose you own stock in a normally solid company that's struggling through a temporary rough patch. Shares in the company have slipped somewhat, yet you have every reason to believe the stock will rebound in less than a year. So you decide to wait it out before selling your shares. Like shareholders, those living in a neighborhood where demand for property has fallen may wish to delay a sale until pricing picks up again. But you may need to wait much longer for a rebound in your housing market than you would for the recovery of a temporarily battered stock. Summey says some people, such as retirees with substantial assets, can afford to postpone a home sale until market conditions improve. But home sellers facing divorce, a job transfer or a major financial setback usually don't have this luxury. Yes, you can price your listing high on the basis that you can "always come down later." But a house that sits unsold for weeks at a time risks becoming stigmatized. -Disabuse yourself of the notion that a well-staged home can be overpriced. Beginning about five years ago, many more home sellers began hiring "stagers," professionals with a flair for interior design who help sellers put their homes in show condition. Good staging, along with fresh paint and new carpeting, can definitely help hasten the sale of a property. Still, as Summey says, these steps won't allow you to fetch an over-market price for your property, especially in a cooling neighborhood. -Consider offering "seller financing" to your purchasers. To go forward with your plans, you may need to sell your home promptly, accessing every penny in proceeds as soon as possible. In that case, you're not a good candidate to become your purchasers' mortgage lender. However, if you're in a strong financial position, you may wish to provide a mortgage to your buyers, Summey suggests. Assuming you can offer this mortgage at a rate that's below prevailing bank charges, your purchasers could be willing to spend slightly more than they otherwise would for your place. Of course, you'll want to carefully screen any would-be purchaser interested in making a mortgage loan from you. Be sure to obtain credit reports and also legal advice to ensure that your paperwork is prepared correctly, Summey says. Ellen James Martin is a former real estate editor and assistant business editor for The Baltimore Sun and author of "100 Best Real Estate Coverage Ideas."